Question

If the market rate of interest is 10% and the stated rate on the bond is...

If the market rate of interest is 10% and the stated rate on the bond is 8%, the bond will sell at:

a.

a discount
b.

a premium
c.

below market rate
d.

par

QUESTION 13

  1. On January 1, 2019, HK Corp. paid $800,000 for 100,000 shares of Jackie Company's common stock, which represents 35% of Jackie′s outstanding common stock. Jackie reported net income of $17,000 and paid cash dividends of $8,000 during 2019. HK should report the investment in Jackie Company on its December 31, 2019, balance sheet at:

    a.

    $800,000
    b.

    $809,000
    c.

    $817,000
    d.

    $825,000

QUESTION 14

  1. A bondholder decides to convert 40, $1,000 convertible bonds with a carrying value of $40,000, into 2,000 shares of $5 par value common stock. What is the correct credit portion of the journal entry for this conversion?

    a.

    Credit: common stock 10,000, additional paid-in capital 30,000
    b.

    Credit: common stock 20,000; additional paid-in capital 20,000
    c.

    Credit: bonds payable 10,000
    d.

    Credit: bond payable 40,000
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When market interest rate is higher than stated interest rate then bond is issued at discount

So answer is a) a discount

13) Calculate ending investment balance

Initial investment 800000
Add: Net income (17000*35%) 5950
Less: Dividend (8000*35%) -2800
Ending investment balance 803150

But in Cost method Reported only = $800000

So answer is a) $800000

14) Journal entry

No General Journal Debit Credit
Bonds payable 40000
Common Stock 10000
Additional paid in capital 30000

So answer is a) Credit: Common Stock $10000; Additional paid in capital $30000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Jake issued $4,000,000 of 10%, 2-year convertible bonds on 01-01-14 when the market rate for similar...
Jake issued $4,000,000 of 10%, 2-year convertible bonds on 01-01-14 when the market rate for similar bonds was 10%. The bonds were dated 01-01-14 with interest payable January 01 and July 01. Jake incurred and paid $45,000 of bond issuance costs. On 07-01-14 after making its interest payments, all of the bonds were converted into 75,000 shares of G's $1 par value common stock. At the time of the conversion, one share of G's common stock was trading for $90...
Concord Corporation has $4080000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 30...
Concord Corporation has $4080000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2021, the holders of $1220000 bonds exercised the conversion privilege. On that date the market price of the bonds was 106 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $271000. Concord...
PayPow Corp. has outstanding 8,000, $1,000 bonds. Each bond is convertible into 100 shares of $1...
PayPow Corp. has outstanding 8,000, $1,000 bonds. Each bond is convertible into 100 shares of $1 par value common stock. The bonds are converted on December 31, 2017 when the unamortized discount on the bonds is $60,000 and the market price of the stock is $30 per share. The journal entry to record the conversion would require a: Select one: Credit to common stock of $24,000,000 Debit to discount on bonds payable of $60,000 Credit to paid in capital of...
Question 1 Company A has a line of credit with the bank. Company A can borrow...
Question 1 Company A has a line of credit with the bank. Company A can borrow up to $100,000 at prime plus 2%. In January, the company borrowed 20,000. In February, repaid $4,000. If prime for February is 4%, how much interest expense does Company A report on the income statement in February? Question 2 On January 1, 2018, Company B borrowed 50,000 signing a 3-year installment note payable with yearly cash payments of $19,402 due each December 31. Assuming...
American Laser, Inc., reported the following account balances on January 1. Accounts Receivable $ 5,000 Accumulated...
American Laser, Inc., reported the following account balances on January 1. Accounts Receivable $ 5,000 Accumulated Depreciation 30,000 Additional Paid-in Capital 90,000 Allowance for Doubtful Accounts 2,000 Bonds Payable 0 Buildings 247,000 Cash 10,000 Common Stock, 10,000 shares of $1 par 10,000 Notes Payable (long-term) 10,000 Retained Earnings 120,000 Treasury Stock 0 The company entered into the following transactions during the year. Jan. 15 Issued 5,000 shares of $1 par common stock for $50,000 cash. Feb. 15 Reacquired 3,000 shares...
4) The interest charged on a $150,000 note payable, at the rate of 5%, on a...
4) The interest charged on a $150,000 note payable, at the rate of 5%, on a 10-month note would be * a- $6,250 b- $2,500 c- $1,000 d- $7,500 5) Beng Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% noncumulative preferred stock outstanding. The company did not pay the preferred dividends in 2019. On December 1, 2020 the company’s board of directors declared that $250,000 will...
Please explain Use the following information for the next two questions: On Apr. 1, 2017 a...
Please explain Use the following information for the next two questions: On Apr. 1, 2017 a company issues a 5%, $800,000 bond at par dated Jan. 1, 2017 and maturing Jan. 1, 2027. Interest is paid semiannually on Jan. 1 and July 1. 18. How should the company record Interest Expense (1) at issuance on Apr. 1 and (2) at the first interest payment on July 1? A. Record nothing; Debit $20,000 B. Credit $10,000; Debit $20,000 C. Debit $10,000;...
Mustang Company has the following shares of stock outstanding: Preferred, 8%, $100 par, 10,000 shares (Dividends...
Mustang Company has the following shares of stock outstanding: Preferred, 8%, $100 par, 10,000 shares (Dividends totaling $15,000 are in arrears.) Common, $1 par, 100,000 shares On October 22, the board of directors declared cash dividends totaling $100,000, payable on December 24 to shareholders of record as of November 24. The preferred stock is NONCUMULATIVE. Which of the following will be included in the journal entry to record the declaration of the dividends? Question 1 options: Debit Paid-in capital –...
XYZ Corp has 90,000 shares of $2 par value common stock outstanding . XYZ declared and...
XYZ Corp has 90,000 shares of $2 par value common stock outstanding . XYZ declared and distributed a 10% stock dividend when the market price of its stock was $12.00 per share. In recording this stock dividend transaction, A) Retained Earnings is credited for $108,000 B) Paid in capital in excess of par value is credited for $7,200 C) Retained Earnings is debited for $$108,000 D) Retained Earnings is debited for $18,000 2)  A corporation repurchased 1,000 shares of its $1.00...
Litke Corporation issued at a premium of $10,000 a $200,000 bond issue convertible into 4,000 shares...
Litke Corporation issued at a premium of $10,000 a $200,000 bond issue convertible into 4,000 shares of common stock (par value $20). At the time of the conversion, the unamortized premium is $4,000, the market value of the bonds is $220,000, and the stock is quoted on the market at $60 per share. If the bonds are converted into common, what is the amount of paid-in capital in excess of par to be recorded on the conversion of the bonds?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT